An Attempt to "Debunk" the Progressive Case Against Rick Perry's Disastrous Governance Fails Big-Time
A post at Political Math purporting to “clear up a couple of common misperceptions” about Texas' jobs numbers under Rick Perry is making the rounds on the web.
Unfortunately, it only muddles a rather clear story: Perry is basing his campaign on the claim that low taxes, deregulation and cuts to public services have brought prosperity to the Lone Star State. And that's simply not true.
Nobody is arguing that Texas hasn't added a lot of jobs since the recovery began – that's the kernel of truth, removed from the larger context.
The counter-argument is that there exists no causal relationship between Perry's policies and those jobs. And the criticism isn't based on the jobs numbers Perry touts in isolation. As I noted this week, Texas is a Third World country when you look at a wide variety of social indicators – things like poverty, health-care and education.
But the post, by Matthias Shapiro, focuses on the jobs numbers so we will too. Let's take a look at it point-by-point.
First, Shapiro digs into the claim that Texas' 8.2 percent unemployment rate is “hardly exceptional.” But he doesn't refute that claim – 8.2 percent is, objectively, 25th in the nation. An unemployment rate right in the middle of the pack is certainly unexceptional.
He then notes that Texas didn't see the same sharp drop off in employment other states experienced. But Shapiro doesn't mention what University of Texas economist James Galbraith told me: Texas fared better in the crash because it had been hit extremely hard in the Savings and Loan crisis of the 1980s. As a result, it has some of the most stringent lending regulations in the country, and, as a result, was spared the worst effects of the housing bubble deflating. Again, we're talking about Perry's claims that deregulation and tax cuts brought prosperity to the state, but it is exactly the kinds of consumer protections that conservatives like Perry vehemently oppose that is responsible for that.
Finally, Shapiro points out that Texas' impressive jobs growth was largely fueled by an explosion in the state's population. This is the argument we've been making, so it's unclear what “common misperceptions” he's clearing up here.
And he oversimplifies the causal relationship, writing, “People are flocking to Texas in massive numbers. This is speculative, but it *seems* that people are moving to Texas looking for jobs rather than moving to Texas for a job they already have lined up. This would explain why Texas is adding jobs faster than any other state but still has a relatively high unemployment rate.”
Shapiro later adds that since 2007, “739,000 people fled into Texas. Anyone who takes that data and pretends that this is somehow bad news for Texas is simply not being honest.” Nobody I know thinks that's “bad news” for Texas – but the implication that these were all people moving from other regions within the United States because of Texas wonderful economy is wrong. Latinos account for two-thirds of Texas' population growth, both via immigration and births. Texas has long been one of the two most popular destinations for immigrants from Latin America, and while many immigrants come to the United States for jobs, they choose where to land based on what immigration scholars call “transnational social networks” In plain language, they go where there are already established communities of Hispanic immigrants.
The relationship between population growth and job creation isn't the one-way street Shapiro imagines – jobs are created and then people move to fill them. When the population increases, the demand for goods and services increases with it, and the private sector creates jobs to meet that demand. Anyway, the main point is that most of the job growth Perry claims to have created through boiler-plate conservative policies were in fact a result of a demographic reality with which he had nothing to do.
And when you adjust for population growth, Texas ranks dead-last in job creation. Also, look at the employment to population ratio, which, unlike the unemployment rate, isn't influenced by people dropping out of the workforce (although it is influenced by the age of the population):
(click for larger version)
Next up: all those minimum wage jobs in the mix. According to the Bureau of Labor Statistics, between 2007 and 2010, the number of minimum wage workers in Texas rose from 221,000 to 550,000, an increase of nearly 150 percent. It now leads the country in the share of its workforce earning the minimum, or below.
These are simply accurate statements based on official BLS data, and Shapiro doesn't try to refute them directly. Instead, he notes that Texas' median hourly wage is about in the middle of the pack (28th out of 51 regions including DC).
...The implication here is that the new jobs in Texas, the jobs that Texas seems to stand alone in creating at such a remarkable pace, are low paying jobs and don't really count.
If this were true, all these new low-paying jobs should be dragging down the wages data, right? But if we look at the wages data since the beginning of the recession...
And it turns out that the opposite is true. Since the recession started hourly wages in Texas have increased at a 6th fastest pace in the nation.
There are a few problems with this. First, the median is the wage in the middle of the distribution and wouldn't necessarily be dragged down by adding a lot of minimum wage jobs the way the average wage would [Ed note: there's a discussion about this point in the comments]. Second, hourly wages don't tell the complete story in terms of incomes because companies often cut hours in a recession. Looking at weekly rather than hourly income data, Patrick Brendel of the Texas Examiner notes, “from December 2007 to April 2011, weekly wages in Texas increased 0.6 percent, compared to 2.5 percent in New York, 9.3 percent in California and 5.0 percent in the U.S.”
And we shouldn't limit our examination to the period after the crash. Looking at per capita incomes between 1998 and 2008, Michael Porter of Harvard Business School found that Texas’ overall growth was eighth slowest in the country.
Next up, Shapiro tackles the claim that rising energy prices, rather than Perry's limited government policies, helped the jobs picture further. He doesn't really dispute it, writing, “Increases in jobs in the energy sector (or closely related to it) account for about 25% of the job increases in the last year. Since the energy sector only makes up 3% of all employment, there is some truth to this claim.” But, he adds, “However, take the energy sector completely out of the equation and Texas is still growing faster than any other state.” That's true – we've already addressed that with the population growth data. But even so, looking at jobs created in the energy sector alone under-estimates the impact of the hydro-carbon bonanza the state has reaped. More money flowing into the pockets of those working in the energy sector means more money to spend on goods and services in other sectors – there's an indirect effect Shapiro doesn't consider. And more energy revenues coming into the state's coffers made a bleak fiscal situation better than it would otherwise have been.
Shapiro then tackles an argument that he must have seen made by conservatives – that Texas “has 100,000 unsustainable public sector jobs that inflate growth numbers.” You won't find me saying that public sector jobs aren't real jobs, or that in a low-tax/low-service state like Texas the public sector is “unsustainable.”
But the simple fact is this: Perry brags that Texas accounts for 37 percent of the nation's net new jobs since the recovery began, he rails about the horrors of big government and yet Texas accounts for 47 percent of the country's public sector job creation over that same period. That does “inflate” the numbers if you choose to see it that way, but the real issue is Perry's hypocrisy.
Finally, Shapiro writes, “One can argue that Perry had very little to do with the job situation in Texas, but such a person should be probably prepare themselves for the consequences of that line of reasoning. If Rick Perry had nothing to do with creating jobs in Texas, than why does Obama have something to do with creating jobs anywhere? And why would someone advocate any sort of "job creating" policies if policies don't seem to matter when it comes to the decade long governor of Texas?” This is so obviously wrong, I'm not sure the reason needs to be stated. While it is true that an executive has less influence on jobs creation than most people believe, we are not only looking at generic executives, but real politicians with real policies.
Obama can claim that the stimulus – which, despite being too small, was the largest in our history and was split up with 37 percent in tax cuts and 63 percent in public spending -- saved or created a boatload of jobs because independent analysts – including those at the CBO – have looked at its effects and concluded that it did so. There is debate over the exact numbers, but even the most conservative economists agree that it was at least 1.25 million (the high-end estimates are closer to 3 million).
Perry also passed legislation designed to spur job growth, and it can and has been evaluated by those outside his administration. As Time magazine's Massimo Calabresi noted, Perry established several massive business tax breaks “designed to lure companies from other states.”
[But] the funds have been controversial. They have channeled millions of dollars to companies whose officers or investors are major Perry campaign donors and Perry has allowed them to keep their subsidies in many cases even when they fail to deliver promised jobs. More important for the purposes of judging Perry’s job-creating record, even those that do produce jobs don’t necessarily create long-lasting ones, or increase the state’s overall prosperity.
Perry's own office claims that these measures created 60,000 jobs over 8 years – that's a lot of money for 7,500 jobs per year.